Financial stocks are rallying after hours on news that the government might soon install a bad bank.

Mike Mayo, a banking analyst from Deutsche Bank, agrees with me that it would be a terrible idea to start nationalizing left and right. Interestingly, the solution he mentions is very similar to what I proposed here on SereneInvesting.com last week. One of my ideas dealt with the government offering insurance for the banks. The government would take any losses first, but it would be fully reimbursed over a longer timeframe and Mike essentially suggests the very same thing.

Just remember: you read it here first.